Something funny was going on with Blogger's ISP and I wasn't able to access/post from work over the past week. I have wanted to link to Michelle Singletary for awhile, because of her no nonsense approach to financial planning. She has two good articles to start of the year here and here that are must reads. Most people that visit here (I hope) are already following this advice, but it's always nice at the beginning of the year to revisit one's priorities. I'll have something more substantial soon.
Just wanted to see if Congress was still letting the legislation extending unemployment benefits expire. Answer: Yep. If the Senate takes Hillary and Gordon seriously and immediately reauthorizes the bill the day Congress reconvenes, it will still mean up to 360,000 Americans losing unemployment benefits. My guess is it will be a bit longer than immediately.
Going with out your usual income really sucks, especially since 25% of Americans only have one month's expenses in cash, and less than 50% have three months expenses or more. You don't need to tell the folks in the Reserves, who signed up for a weekend a month and get a year; a year with military pay versus their civilian pay and their families having to make do. But, at least when their term is up they can leave. Uh, oh.
Susan Tompor has a two-part series underway exploring consumers and their credit, making plenty of references to Warren and Tyagi's The Two-Income Trap. The Houston Chronicle also does some mathematical gymnastics with various relative prices of investments. Just be sure to always question the assumptions. There's two in every sentence, the inflation rate and the rate of return.
1. Only discuss relative prices: In economics, absolute prices don't matter, so don't get sucked into a "inflation or deflation?" debate. Keep thinking in terms of income versus expenses and assets versus liabilities and income statements versus balance sheets. Also try not to aggregate any analysis too broadly. There will be winners in any economic environment as well as losers, whether the economy booms or busts.
2. Don't make predictions: Too many economists try to be fortune tellers. If I'm forced to make a prediction, at least offer one scenario on how I can be wrong. Keep Bill Bonner's mantra in mind: this is what ought to happen, not what will happen. Sure, the dollar looks to be toast in 2004, but speculators dictate the market, not the fundamentals. The NASDAQ was supposed to be toast in 2003. It's up almost 70% from its lows.
3. Don't mention detractors: Don't waste blog space linking or mentioning idiots who have no clue. I sometimes wonder why anyone attends Presidential Press Briefings, especially when the White House itself now refers to them as "gaggles" (definition: a herd of cackling geese). You KNOW what Scott McClellan is going to say. If nobody attends, how can they spin? You KNOW Bill O'Reilly is all about the ratings. If you don't watch him (it's a beautiful day outside today) then he becomes powerless.
4. More links to good articles, less commentary on them: this is a pet peeve that I'm often guilty of - readers can figure things out for themselves. My favorite posts in retrospect are those where I can cram 25 related links in a single paragraph with no commentary.
5. Don't stray from the central theme: It's still the economy. While much of politics is an interesting sideshow, people's livelihoods depend on the performance of our economy. It's not my job to be pessimistic or optimistic, to bash Bush or praise him, but to try to interpret the signs on how the economy is evolving. The central idea behind Carville's slogan was that politicians should care about ordinary Americans, and to show they care by trying to make the economy work for them. At the same time, governments should work on policies that accomplish this task most efficiently; supporting a private sector environment that cooperates with workers and is not in competition with them.